Outside of typical earnings as an employee, sometimes taxpayers will have additional forms of income as reported on a Form 1099 MISC. These earnings can come from another trade or business such as contracted work and should be reported when you file your tax return using Form 1040, Schedule C, or reported as "other Income" on the Form 1040. Remember, income from self-employment trades or businesses is taxed under both income tax and 15.3% self-employment tax. Other forms of income are only taxed at the income tax rate.
According to the IRS, a trade or business is "an activity carried on for a livelihood or in good faith to make a profit." In addition, the IRS states that trade or business activity must occur regular, frequently, and on a continuous basis.
Occasional sources of income, such as a one-time transaction, do not count as trade or business income under the rules of the IRS, as the activity does not occur regularly or frequently. In addition, there is no effort to continue the activity on a consistent basis.
Reporting occasional income as "other income" on your tax return saves you from having to pay self-employment tax, although any deductions you claim as expenses for the activity are limited by the actual amount of income you earned.